Michael Bevan is the CEO at consumer finance specialist, Duologi. Duologi is the fastest-growing point-of-sale payment solutions provider in the UK market. Today, the team is drawn from money specialists, technologists, digital marketing experts and data analysts from a wide variety of backgrounds with a shared passion to help move forward a finance industry that has grown slightly stale. Here, he shares his top five ways in which businesses can offer effective POS finance.
Once upon a time, point-of-sale (POS) finance was associated with big-ticket items for the home such as sofas and electrical goods, but little else. But times are changing. More and more retailers – both online and bricks-and-mortar – are realising that the right POS finance solution can turn browsers into buyers and attract whole new sets of customers.
After all, POS finance done right is all about offering greater flexibility for customers – something which, in an era of mobile payment apps and challenger banks, more and more customers are expecting. A lack of payment options has been suggested to reduce online sales by up to 30%, whilst our own research suggests that 34% of shoppers would be more likely to spend with an organisation offering POS finance options. Yet nearly a third – 27% - of the people we surveyed had never used such a solution to buy anything.
What, then, can business do to offer the most effective POS finance solution possible, and build up this potentially lucrative new source of sales? What does an effective POS finance offering look like? Here are five key factors that underpin the best POS solutions.
In order to take up a POS finance offer in the first place, customers need to know it exists. An obvious point, perhaps. And yet our research also showed that almost all – 94% in total – of people wouldn’t think to actively ask a retailer if POS finance was an option.
This means that awareness needs to be built without the customer having to make extra effort – which means clear messaging instore and online. How that messaging should be framed will, of course, vary between sectors. Some retailers are better suited to a loud and proud ‘buy now, pay later’ line, whereas others require something more discreet. The POS offer should be in line with the overall brand.
The most important information for shoppers when it comes to deciding whether or not to apply for POS finance is the same as for direct purchase – how much will it cost? Shoppers need to know precisely what payments they will be making, when they will be making them and for how long. They also need to know what the payments will add up to – in other words, whether the POS option is interest-free or not.
Whilst the precise figures associated with a POS finance solution will depend, of course, on the size of the loan taken, it is still possible for retailers to offer ballpark figures upfront. ‘Interest-free finance available from £50 a month’, for example, gives a much clearer indication of what the purchase will ultimately look like and whether it is affordable than simply stating ‘Finance available’. And as ever, upfront information improves transparency and helps to build an image of trustworthiness and straightforwardness – essential attributes when selling financial solutions.
Another crucial aspect of clarity lies in moving away from jargonistic financial language and overcomplicated descriptions of how a POS solution works. Whilst it is, of course, crucial to have full terms and conditions available and visible, it is also important to be able to answer core questions simply and clearly. On a website, this probably means having an FAQ page; in-store, it means ensuring that staff are properly trained in the nuances of POS finance, and perhaps having literature available also.
Informing customers as to why POS finance could be a powerful option for them, and encouraging them to apply for it is only the first part of the customer journey. That application process then needs to be painless – meaning it needs to be quick, simple and straightforward, with the lowest possible referral rates.
This is where the POS provider becomes particularly important. Their application form must be simple and their refer rate must be low. For online retailers, the POS solution should avoid requiring a customer to duplicate the information they may have already entered in the online checkout process – this can be achieved by pulling through information from the retailer’s checkout form automatically. Should a manual check have to take place, this should be completed as quickly as possible, and the customer should be absolutely aware of what is happening.
POS finance should always be offered affordably and ethically, in line with Financial Conduct Authority (FCA) regulations – and this compliance should be made clear to customers. There is a big difference between a customer using an interest-free POS loan to spread the cost of a large item in a flexible way, and a shopper relying on high-interest credit to make a purchase they don’t really need or can’t afford, but have felt pressured into making. Retailers need to understand the difference, and place customer care and ethics front and centre when choosing and marketing their POS solutions.
5. A bespoke approach
With POS finance solutions gaining prominence and popularity, there is an increasingly wide range of options on the market and no need for retailers to go for a one-size-fits-all approach. Bespoke personalisation is essential to ensure that retailers offer the model and the marketing which suits their products, their prices and above all their customers best. And in turn, POS finance can help drive more conversions, more sales and an improved reputation for customer-centric retail.